Getting kicked off Kickstarter provided the kick two Orange County entrepreneurs needed to create their own crowdfunding marketing agency.
A campaign created by Jeffrey Maganis and Ivan Kan was booted off Kickstarter in 2015 because their company, So Special Labs LLC, was raising money on behalf of a project they didn’t create.
The entrepreneurs worked with China-based Shenzhen EnJoYou Electronics Co. for 10 months to bring its Dot product to market in the U.S. after coming across it at a Hong Kong trade show. Maganis and Kan billed it as the “World’s Smallest Bluetooth Headset.”
The Kickstarter campaign raised $300,000 in less than two days, blowing past the original $30,000 goal, but it all had to be refunded because the product wasn’t So Special’s.
Kickstarter and Indiegogo are the two primary crowdfunding sites where entrepreneurs raise money for their products, typically providing an early version of the product or some other reward in exchange for cash.
Maganis said the experience led the duo to create their own agency, Los Angeles-based Crowdcreate LLC, which creates campaigns for entrepreneurs, who take their campaigns to crowdfunding sites. Maganis lives in Irvine, Kan in Los Angeles.
Learning Curve
Maganis started an earlier business in 2011 in Irvine. ChargeTech created cellphone charging stations for businesses, such as American Airlines, Disney and Harvard University.
But he still felt like a rookie.
“I didn’t know what I was doing,” he said. “It was an embarrassing year as an entrepreneur.”
He paid $20,000 to create a 90-second infomercial that “completely flopped,” he said.
So he turned to making cold calls instead, to buyers at retailers such as Target, QVC and Best Buy.
“They didn’t even respond,” he said.
And he pitched to Tech Coast Angels of Orange County, one of five regional networks of the largest angel investor group in the country. He was one of the finalists at its Quick Pitch Competition in 2012, but he got no investments.
Then he decided to try crowdfunding to raise money for ChargeTech. He launched his first campaign in 2014 on Indiegogo and soon came to believe that crowdfunding wasn’t conducive to business-to-business products.
His campaign fared poorly, reaching only 1% of its $30,000 goal. So he switched to business-to-consumer products.
His second campaign, also on Indiegogo, was for a credit card-sized phone battery pack. It again raised only 1% of a $30,000 goal. He attributes the result to a “poorly created” campaign page and video.
“I’ve since learned how to create an engaging crowdfunding campaign page and video that resonates with backers and the broader audience,” he said.
His adversity finally paid off in 2014. He hit pay dirt when ChargeTech, now based in Costa Mesa, raising $400,000 on Indiegogo after originally setting a $30,000 goal. The product was called the “World’s Smallest Portable Power Outlet,” or what Maganis describes as the first portable battery pack with an AC wall plug.
His most recent campaign, which took place last fall, raised 2,675% of its fundraising goal on Indiegogo, taking in more than $802,000 for PLUG, the “World’s Most Powerful Battery Pack,” a high-capacity battery pack with two AC wall plugs and solar charging capability.
He uses the superlative product names as a marketing play to draw attention to his campaigns but said, “The facts are indeed true.”
Maganis extended that campaign on Indiegogo’s InDemand platform, which allows companies to keep raising money after the original campaign ends without having to set a fundraising target or meet a deadline.
He said he’s raised more than $1.6 million from his own crowdfunding efforts.
Their Own Way
Maganis and Kan, a friend from his days at the University of California-Irvine, decided to start a marketing agency to create crowdfunding campaigns to be launched on traditional sites, acting on the idea that many engineers who create companies are good at what they do but don’t excel at sales and marketing.
Maganis has a degree in economics but says his ups and downs in business taught him a lot about promoting a product.
They launched Crowdcreate in August 2015, using the funds Maganis earned from ChargeTech’s 2014 campaign and initial client commissions to fund the agency, Maganis said.
Crowdcreate also helps entrepreneurs with public relations, direct email marketing and social media to promote their crowdfunding campaigns. They based it in Los Angeles—the office is in the WeWork co-working building in the downtown business district—because that’s where the majority of content creators, videographers and photographers are, Maganis said.
He calls Crowdcreate a crowdfunding “accelerator.”
“Our big pitch is we usually raise two to three times more funds than if the creator were doing it on their own,” he said.
Crowdcreate uses tools like Google Analytics to see how much traffic is driven to campaigns by marketing efforts. The agency has created more than 20 campaigns, raising more than $5 million via crowdfunding, Maganis said.
He said Crowdcreate is different from other marketing agencies because it’s completely performance based. It takes a percentage of funds raised, from 15% to 30%, depending on its involvement. Maganis wouldn’t disclose the privately held agency’s revenue.
Agency Fan
Brea-based Aircom Audio Inc., whose product is a wireless headphone set with patented “Airflow” audio technology tapped Crowdcreate before putting its campaign on Indiegogo. The campaign was set up with a flexible goal of $30,000 so that even if the target wasn’t met, the company would still receive contributions and donors would get the product. The Aircom team raised more than $11,000 in 30 days, Kan said.
“Crowdcreate provided a roadmap to help navigate through the labyrinth of crowdfunding,” President Ryan Tsui said via email. “As a first-timer, we thought it was just a, ‘Post it and they will come (technique),’ but after working with Crowdcreate, we learned there is much more to it than that. Beyond helping us get the campaign up and running, they held our hand through the duration of the campaign and helped us generate more exposure and engagements with strategically-timed promotions.”
Last Laugh
Crowdcreate launched a new Dot bluetooth headset campaign for Shenzhen in 2015, this time on Indiegogo. It redesigned the original campaign to focus on the “pain points raised by the early backers,” Kan said and scored more than $715,000, or 1,253% of the goal.
“We were extremely thankful for the opportunity to re-launch the campaign with the manufacturer’s continued partnership,” he said.
The Dot will soon be available on Amazon.com, Maganis said.
Crowdcreate’s next goal is to live up to its name.
“Crowdfunding is throwing money at an idea,” Maganis said, explaining that his idea of “crowd creating” is getting feedback on an idea, then creating a whole new product.
“Wouldn’t it be great if we could Crowdcreate the iPhone 8 together?” he said. “Apple doesn’t solicit feedback from their customers. … You would upload the iPhone 7 to the platform, and people would put up their best ideas, and the crowd would weed them out. And then Apple would come in and say, ‘That’s a good idea. Let’s go live.’ And now we’re in the crowdfunding phase.”
That may not work for an Apple product, but Crowdcreate wants to adapt the concept to new product ideas, along the lines of an online focus group. To that end, the agency is seeking partners, investors and talent.
